Singapore Budget 2015: 10 more hawker centres to be built by 2027

SINGAPORE - Ten more hawker centres will be built over the next 12 years in a bid to moderate food prices here, Second Minister for the Environment and Water Resources Grace Fu said in Parliament on Wednesday.

These will be built in new estates or in existing ones that are relatively under-served, such as Bidadari, Sengkang, Choa Chu Kang, Bukit Panjang and Bukit Batok, Ms Fu said during the debate on her ministry's budget.

This is on top of the commitment by the Ministry for the Environment and Water Resources (MEWR) in 2011 to build 10 hawker centres over 10 years. The first two of those centres will open in Bukit Panjang and Hougang this year.

"Altogether, the 20 new centres will inject an additional supply of more than 800 cooked food stalls and we believe this will help to further moderate rentals," Ms Fu said.

Market competition can help keep food prices in check, because food prices tend to fall as the number of stalls selling the same type of food increases.

Although the price of food may differ from one hawker centre to another, a statistical analysis has found that if there is one other stall selling a similar type of food in the same centre, prices are on average 8.4 per cent lower.

The rise in the number of hawker stalls is one measure the ministry is taking to ensure food prices do not increase too much over time.

In response to concerns from MPs about rises in hawker centre rents, Ms Fu noted on Wednesday that the average rents of the six hawker centres in Toa Payoh were around $650 per month, with more than half of the stalls, primarily subsidised ones, paying $320 or less.

But if such stalls are excluded, average rents are around $1,100 per month, "which compares favourably to the coffee shops or food courts nearby", she added.

Overall, more than 85 per cent of hawkers pay less than $1,500 in monthly rent, Ms Fu said.

Pointing to an analysis of the drivers of food prices conducted in 2014 by the Ministry of Trade and Industry and MEWR, Ms Fu said that rentals only comprise about 12 per cent of a hawker's costs - a small fraction compared to the more than 50 per cent spent on raw materials.

Manpower costs contribute to about 17 per cent of total costs, with 9 per cent coming from utilities and 3 per cent from table cleaning and other costs.